Adviser insights help Masthead grow its market

Masthead’s three key observations about advisers, positions the advice industry in a positive light and indicate confidence about the future. This is a healthy situation for both the industry and South African consumers.

Firstly, we believe advisers in general do a good job. In spite of the number of complaints and negative publicity, there are far more satisfied clients than dissatisfied ones. Although it is easier for consumers to report complaints, only 0.13% of customers who purchase life policies complain to the Financial Advisery and Intermediary Services (FAIS) Ombud. We would like to believe that 98.7% of customers do not complain, because they are happy with the advice they received, or because they have no reason to complain.

Of the valid complaints lodged with the FAIS Ombud, fewer than two complaints per 10 000 customers were either settled or found in the customer’s favour. These numbers show that the value advisers add significantly outweigh the negative publicity generated by a handful of erring advisers.

Secondly, becoming business fit to meet the ever growing regulatory requirements, is an ongoing process and journey. Advisers have accepted that this is necessary, and are committed to going the full distance.

However, they ask the authorities to consider whether new regulation is necessary because of the intensity of its implementation, and whether the benefits outweigh the costs. This positive mind-set amongst advisers means they are committed to being compliant. The level of professionalism in the industry is raised and consumers ultimately benefit.

Thirdly, advisers are resilient. They are not resistant to change, as clearly shown in their willingness to adapt to the requirements of the FAIS Act, Financial Intelligence Centre Act (FICA) regulations, regulatory exams and their acceptance of the principles of Treating Customers Fairly (TCF). Interestingly, fewer advisers exited the industry in South Africa after FAIS was introduced than in the UK, who exited when market conduct regulation, the equivalent to FAIS, was introduced.

Advisers can be proud of what they have accomplished thus far. We believe they should communicate their accomplishments to consumers and clients: that they operate a reputable practice that delivers service of a high standard, subscribe to the Masthead Code of Conduct and comply with FAIS legislation. For this reason, Masthead launched the FAIS Compliant – Masthead Verified seal, which is available to qualifying members to display on their electronic marketing materials.

To qualify to use the seal, Masthead members must show evidence of compliance with legislation and eligibility to use the seal is reviewed annually. By encouraging members to attain and maintain a particular level of compliance, we are able to help them run better businesses.

While compliance is one of Masthead’s key service offerings, the business provides a wider, integrated solution to suit both adviser led and FSP businesses. By looking at each business individually and from various angles, Masthead is able to offer practical advice and support that enables a business to function efficiently within the industry.

These services can also be customised for foreign FSPs. In recent months, Masthead has been delivering practice management services to FSP clients based in Dubai, Hong Kong and Singapore.

Going forward, Masthead’s business support will remain customer focused. The significant volume and complexity of regulation, together with a growing administration burden means that businesses need to operate as efficiently and smartly as possible. Independent business advice may mean the difference between surviving and thriving.